Ditch Debt Safely

Capitalizing on the wave of Americans desperate to ditch their debts, a slew of new debt settlement companies have hit the scene, with flashy TV and radio ads promising to make your debt disappear.

But many engage in "abusive, fraudulent and deceptive practices," like charging fees in advance of any settlement, and lying about their success rate, according to Federal Trade Commission investigations.

Thankfully, new rules take effect today that will ban many of these practices and protect consumers. If you're considering debt settlement—and we're not saying you should—you are now entitled to:

Full disclosure about what the settlement process will cost, how long it will take, the negative effect on your credit and clearer information about dedicated accounts to pay fees, if required.

A track record of the company's success rate for the last two years.

An honest description of services.

Just bear in mind that "debt is settlement bad for most consumers," says Ed Mierzwinsky, consumer program director for the US Public Research Interest Group (PIRG). It's time-consuming, expensive and it can hurt your credit.